Other than being the largest and most talked about financial market out there, Forex has a very appealing characteristic - around-the-clock operation. Being available and opening its doors to international participants at any time of the day is arguably its best characteristic. Even though Forex never sleeps and you have endless opportunities to start trading, some time frames are a better choice. Here is what you should know about the FX exchange hours.
Forex Market Hours Definition
The foreign exchange market consists of banks, large organizations, asset management companies, hedge funds, retail brokers and investors all over the world. The market hours offer them a timetable that indicates when they can conduct currency operations and when they can’t.
The market hours offer them a timetable when they can conduct currency operations and when they can’t.
Technically, sessions are restricted to business hours like typical stock exchange hours, but considering there are multiple markets all over the world, Forex can be entered at any time. When one session ends, there is already another one in full swing. It only stops for weekend breaks and holidays. However, with moving time zones, weekends are squeezed tighter.
Forex can be entered at any time of the day during the work week.
There’s not just one market in Forex that you should be paying attention to. This network accommodates many markets and trading hours are dictated by when trading opens in different parts of the world.
Why Forex market hours are so important
Currency pairs are open to trading whenever you wish, but no trader or investor has the capability to keep an eye on the market, or a position for hours on end. Moreover, not all market hours offer equal opportunities.
Certain currency pairs demonstrate different trends and activity as you move throughout the day. This is explained by the fact that market participants belong to varying demographic groups and engage during different parts of the day. This brings us to the conclusion that the most profitable activity is closely connected to certain busy market hours.
The most profitable activity is closely connected to certain busy market hours.
For instance, if a Forex trader is unaware of what to expect from a session, they might miss a profitable opportunity. Or the trader might not be at their computer the moment when there is a spike in volatility, allowing them to move against a set position. To minimize the risk, you can learn the most common volatility patterns and thus, choose what time fits your personal trading needs.
You can learn the most common volatility patterns and thus, choose what time fits your personal style.
Major Forex trading sessions
Major sessions and the most influential financial centers go hand in hand. The session bears the title of the relevant city during its business hours. Generally, Forex is divided into sessions according to which ones are associated with peak traction.
Asian session (Tokyo)
When an optimal liquidity position is restored from the weekend break, the Asian trading session appropriately sees the results of that first. This is where the trading week effectively starts. The trend for this region is unofficially defined by the Tokyo financial markets.
Tokyo works from 7:00 pm to 4:00 am EST (EDT).
Nevertheless, this session is not restricted to Tokyo alone and attracts movement from other places. Given the fact that Australian, Chinese and Russian markets are so geographically distant, there are good reasons why the beginning and ending of Asian markets hours go further than the regular Tokyo hours. Minor fluctuations are due to the fact that Asian economies are highly dependent on the export of their goods, and therefore they do not need strong fluctuations in national currencies.
Asian economies are highly dependent on the export of their goods, and they therefore do not need strong fluctuations in national currencies.
European session (London)
As the trading day advances, not long before the Asian session closes its doors, the European session steps in on the activity. This particular area is crammed with multiple markets so this zone is notably busy, due to a number of leading European financial markets. London takes on the role of dictating the parameters for the European session, which accounts for 30% of all Forex operations.
London works from 3:00 am to 12:00 noon EST (EDT).
The European market is an interesting field since there are many influential platforms such as France and Germany, and they even start operating before the official start in the UK. At the time of its opening, the euro grew in price, and the market saw a strong price movement.
Such a situation is ideal for obtaining high profits, but this can only be achieved by experienced players who are able to monitor the fluctuations of many currencies and make a quick forecast regarding market trends. The session is extended to use the volatility generated by the London market.
There is strong price movement in the market, which is ideal for obtaining high profits.
US session (New York)
By the time the American market starts participating, the Asian session has already finished several hours prior. Nevertheless, the European participants have only gone through half of the working day. For the most part, the US session is naturally determined by what is happening in the States, for the most part, with some influence coming from Canada, Mexico, and a few other participants.
New York works from 8:00 am to 5:00 pm EST (EDT).
Unsurprisingly, the active state of the market in New York signifies intense volatility. If there is a news release that directly relates to the region, then it always causes a strong reaction and a very sharp change in exchange rates. This market is peculiar because it creates the strongest market price change in a matter of seconds.
The New York session signifies intense volatility and it creates the strongest price change in a matter of seconds.
The 8:00 am start of the US session is the unofficial start prompted by the early work of the futures exchange, commodity market and the noticeable inflow of economic and political news. As a result of the difference between the market closing time in one part of the world and a new trading day in another, a gap in liquidity takes place at 5:00 pm when the New York market closes.
Minor Forex trading sessions
Early Monday morning, New Zealand comes into play with the Wellington market, and it technically indicates the start of the new week.
Wellington works from 5:00 pm to 1:00 am EST (EDT).
Wellington is very calm and observes a rather small turnover. Because of this, it is not considered a very popular platform.
Another market in the Pacific area is Sydney. The market activity only begins to gain momentum with this session because the real movement starts with the Tokyo session in two hours’ time.
Sydney works from 5:00 pm to 2:00 am EST (EDT).
The Hong Kong and Singapore exchanges open an hour after Tokyo and the movement is seen in pairs, such as the Japanese yen, CNY, the Hong Kong and Singapore dollar.
Hong Kong and Singapore work from 8:00 pm to 5:00 am EST (EDT).
After the news at 8:00 - 8:30 pm there is generally an off-peak period, which lasts a couple of hours. The trading volume increases towards the end.
The amount of conversion operations in Frankfurt is significant. The operations are simultaneously carried out in London, Frankfurt and partly in New York, so it is great for conducting large-scale operations.
Frankfurt works from 2:00 am to 11:00 am EST (EDT).
The majority of Chicago banks open an hour later than in New York.
Chicago works from 9:00 am to 6:00 pm EST (EDT).
The exchange time of the International Monetary Market (IMM) - a division of the Chicago Mercantile Exchange, CME - is 7:20 am 2:00 pm. The trading in currency futures is heavily conducted at IMM, which has a strong impact on exchange rates.
Overlaps in Forex trading sessions
Overlaps correspond to bigger price movements, leading to favourable circumstances. There are three overlaps that take place every day:
Frankfurt and Tokyo (2:00 am to 4:00 am): there is a much smaller volatility movement compared to the New York/London overlap. However, there are still moderate fluctuations for you to use. EUR/JPY is the better combination to go for, as they are affected the most.
London and Tokyo (3:00 am to 4:00 am): the profit opportunities can be seen in currencies that are in high demand such as yen, euro and pound combinations. Since the US market has yet to open, this overlap has moderate pip changes.
New York and London (8:00 am to noon): the central time for the day, i.e. the most intense and fruitful period. Since more than 70% of all FX operations are carried out at this overlap, it is proof that high volatility brings greater profits. This has to do with the fact that the US dollar, euro and pound gain the biggest traction.
When is the best time to trade?
The most profitable period for conducting FX operations are the busiest periods, such as the sessions in London and New York. This involves large operation volumes, so take a look at whether your currency pair is in high demand. It also means sharp price changes, but keeping up with changing trends requires some experience. The presence of these two factors causes the most impressive results. This is common for the busiest sessions and their overlaps. The spreads also get narrower and this leads to lower fees.
The most profitable period is when the market is the busiest, such as the London and New York sessions.
The broadly acceptable principle is that Tuesday, Wednesday, and Thursday attract the biggest activity. In case you want to limit your work week, these three days would be the best choice.
That said, there are serious grounds for acting cautiously. If a trader wants to have tremendous profit, they might be tempted to use leverage as high as 1000:1. While this ratio could potentially provide large gains, on the flipside, the trader risks losing equally large sums of money because of one trade.
However, a trader risks losing large sums of money because of one trade.
For example, you could be working with the EUR/USD currency pair. With the influence of busy traction, the New York/London session overlap could possibly yield the highest profits for you. Similarly, depending on what pair you are aiming to work with, you should research when peak activity takes place. Generally, it revolves around the local time zone for the national currency.
As a trader, the first task is to decide whether the periods of high volatility will be compatible with your particular technique. If they are, then you should recognise your optimal trade times – it could be a particular session, an overlap, or the short periods after economic and political releases.
Knowing the best market hours doesn’t mean you have to seize every opportunity for a favourable move. An FX trader could be forced to wake up extremely early to keep up with everything. This could cause long-term burnout and frequent mistakes, so you also have to consider your well-being.
Having enough information about what to do during certain Forex trading hours, in addition to a general knowledge of FX trading sessions, provides a significant benefit for your trading results.
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